The mid-sized property developer has taken its business strategy one step further than most developers who typically just sell land to foreign data centre operators.
To ensure it generates recurring income, it is collaborating with Bridge Data Centres (BDC) to develop Mah Sing DC Hub @ Southville City in Bangi, Selangor, on a joint venture (JV) basis.
Earlier this week, Mah Sing announced it had expanded its collaboration with BDC to further develop the data centre hub.
This adds 35.68 acres and 200MW of power capacity to the initial 17.55-acre JV development announced in May this year, resulting in a combined development area of 53.23 acres with a total power capacity of 300MW.
The hub has three remaining plots capable of accommodating another 290MW, bringing its total potential power capacity to 590MW, exceeding the previous management guidance of 500MW.
BDC is primarily owned by Bain Capital, a leading provider of data centre solutions in Asia Pacific with operations in Malaysia, India, and Thailand. It operates four data centres in Malaysia – in Cyberjaya and Bukit Jalil, in Selangor, and in Sedenak, Johor.
Thumbs up from research houses
The latest JV development has been given the thumbs up by several research houses which reiterated their “buy” calls and raised their target price (TP) for Mah Sing’s shares.
In a note, TA Securities said it is optimistic on the DC Hub development as it effectively leverages Mah Sing’s existing landbank to generate recurring income from data centres.
“This strategic move not only diversifies Mah Sing’s revenue streams but also opens potential for similar projects at other sites, including the MSS Business Park in Sepang.
“Additionally, we gather the 42.5 acres of land at Meridin East in Johor, with up to 300MW capacity, could also be sold to DC operators,” it added.
Under the JV structure, Mah Sing will manage the construction of data centre facilities and infrastructure, facilitate approval processes, and contribute the land.
“BDC will be responsible for designing the facilities to meet the requirements of high-capacity clients. BDC is actively seeking to attract hyperscale and artificial intelligence (AI) data centre customers with strong financial backing,” said TA.
It noted the JV company will be formed with equity participation from both Mah Sing and BDC, with the exact shareholding to be determined later based on contributions.
Surge in share price
Mah Sing’s shares ended unchanged today at RM1.72, valuing the group at RM 4.4 billion. Its shares have surged 110% year-to-date.
TA has raised its TP to RM2.40, an almost 40% increase from the current price. Meanwhile, RHB Securities has maintained its “buy” call and upped its TP to RM2.70, a 57% jump from the current price.
RHB said the disposal of 53 acres of land in DC Hub @ Southville City and potential disposal of the 42.5-acre land in Meridin East, Johor, could generate proceeds of about RM650 million, sufficient to cover almost all of its funding commitment for the JV development.
MIDF Research said it views the second JV with BDC positively as it will increase recurring income of Mah Sing.
“That will allow Mah Sing to ride on the booming demand for data centres in Malaysia,” said MIDF, which kept its “buy” call and raised its TP to RM2.01.
Mah Sing DC Hub @ Southville City is located within 20km proximity to existing data centre hubs of Cyberjaya and Bukit Jalil.